GDP has surged but worries remain

When former Coca-Cola Company executive Neville Isdell agreed in May 2004 to come out of retirement to become the global beverage giant’s chief executive, little did he realise that many people were keenly watching to see where his first overseas trip would be to.

Many believed that he would hop across to neighbouring Mexico, the largest market for the soda giant outside of the United States. To the surprise of many, however, he chose India, which Isdell felt offered great growth potential for the company troubled by dipping sales volumes.

The tour to India and populous neighbour China shortly after he took charge as CEO, made Isdell realise a different reality: the scorching summers in the two emerging Asian giants will help offset weaker consumer demand in the home markets of North America.

“Today, India is one of the great growth stories... a country that always will annoy and frustrate, but from which a great society that will help make the world a better place is emerging,” Isdell said.

India’s shift towards becoming the new epicentre of world economic activity began 13 years before Isdell’s visit.

In 1991 India flew out 67 tonnes of gold to Europe to get $600 million dollars to tide over a dire import payment crisis.

Twenty years later, it said it was ready to help Europe crawl out of a debt crisis as it stares into the prospect of sovereign default by Greece, the cradle of Western civlisation.

India’s gross domestic product (GDP) — the value of all goods and services produced in the economy — is set to cross $ 2 trillion joining the elite league of the US, Japan, Germany, China, UK, France and Italy as the mass of economic activity shifts to Asia.

Two years ago, US President Barack Obama arrived with the largest US business delegation that included the who’s who of American business to any country — a clear sign that India’s rising economy has never mattered more than now.

Yet, keeping hunger at bay has been one constant policy challenge over the last six decades.

The World Bank reckons more than 400 million Indians live on less than $1.25 a day. By most standards, India has been a “welfare laggard”, despite the massive strides in overall growth in the last several years.

“The biggest threat to growth comes from two sectors: agriculture and infrastructure. We have recently seen how even a small decline in agriculture growth can bring distortions in the economy,” a senior government economist told HT requesting not to be identified.

India’s per capita, calculated by evenly dividing the national income among the population, is set to cross R60,972 a year. It gives an idea of the standard of living of the people, although it hides a stark reality: much of the growth in income may have been driven by the richest Indians.

Economists agree that India is today reaping the ‘demographic dividend’ of being home to the largest population of young people in the working age-groups.

However, official data also admits that almost every second child in India is malnourished.

“The result is that we are losing out on the full productive potential of this young working population. And finally, the availability of public resources depends on what we wish to spend public money on — armaments, corporate subsidies, superior urban infrastructure, or a dignified life for the poor,” said Harsh Mander, member National Advisory Council.

One of the primary objectives of subsidised entitlements to poor is address concerns of equity. Otherwise, there would not have been the need to legislating free lunch for the poor who have a right to live with human dignity.

With a $2 trillion GDP India may be counted among the richest in the world, but it still has some distance to go before it can get food into every mouth that needs it. And it cannot happen without growth and more growth in GDP for many years at a stretch.